Bates Wells Briefing for Charities & Social Enterprises | 12 April 2017

Bates Wells Highlights

Charities, Social Enterprise

Using data to profile donors came under the spotlight again last week when the Information Commissioner’s Office issued penalty notices issued against 11 charities. Many charities concerned about the penalties will want to engage with the ICO’s discussion paper (also published last week) about profiling generally under the General Data Protection Regulation. See today’s Briefing for full details.

This Briefing covers the two week period from Monday 27th March to Friday 7th April.

At a glance

The Charity Commission has launched new templates to help directors of charitable companies with income below £500,000 to prepare their accounts.

Civil Exchange has published ‘A Shared Society? The independence of the voluntary sector in 2017’.

The House of Commons and House of Lords’ Joint Committee on Human Rights has published a report on human rights and business.

The Information Commissioner’s Office has launched a new set of resources aimed at improving records management in the health sector.

The Equality and Human Rights Commission has published ‘Being disabled in Britain: A journey less equal’

Charity Commission

Statement on HL Select Committee on Charities

The Commission has published a short informal response to the report on the House of Lords Select Committee on Charities. The Commission will also respond formally in due course to the Committee.  For a BWB summary of key points from the House of Lords report, see here.

Housing – regulatory alert

The Commission has issued a regulatory alert to remind housing associations of changes to the land disposal framework.   This is to remind registered providers of social housing which are registered charities that they must comply with Part 7 of Charities Act 2011 with regard to disposals of land and mortgages, with effect from 6 April. The provisions do not apply to registered providers which are exempt charities. The Commission is also writing to charities that may be affected to remind them of the changes.  For more see this BWB summary.

Registration refusal – Countryside Alliance

The Commission has published its decision to refuse to register The Countryside Alliance as a charity.

Inquiry reports

The Commission has published inquiry reports into:

  • The Grail Trust (272411). The charity provides financial support and advice to Grail Trust India, an Indian registered society which helps disadvantaged children in South India and previously operated a children’s home. In 2011 the Commission was alerted to an allegation of child abuse within Grail Trust India by a person connected with the charity. That allegation is still being investigated by the Indian authorities. The charity did not report the allegation to the police in the UK or disclose it to the Commission via a serious incident report. When the allegations were reported in the international press, the charity trustees rejected the allegation. The inquiry found that there had been misconduct and mismanagement due to mishandling the allegation of abuse, failure to ensure that there were proper safeguarding systems in place and failure to fully understand that safeguarding obligations extended to visitors from the charity to Grail Trust India. The Commission has used its powers under s. 84 Charities Act 2011 to direct the trustees to carry out an action plan regarding their safeguarding procedures and is monitoring their compliance with it. Also see this press release.
  • The Spiritualist Association of Great Britain (formerly The Marylebone Spiritualist Association) Limited (225455). The inquiry was concerned with the disposal of the charity’s property for £6 million, as questions were raised in the media about why it was then sold on shortly afterwards for over £21 million. The inquiry concluded that there had been mismanagement of the charity by the trustees, which included failing to obtain contemporaneous specialist independent advice about how to achieve maximum return on a property disposal where the post-disposal value would be likely to appreciate significantly; and failing to comply with the statutory requirements on the disposal of charity land. However, the Commission did not find evidence of private benefit to trustees or connected persons in relation to the disposal of property.  The Commission has decided that in the circumstances, it would not be possible or proportionate to take any further regulatory action against the charity. See this press release for more information.

New inquiries

The Commission has announced that it has opened inquiries into the following charities:

  • Believe in Magic (1145557). The charity has objects to relieve the needs of children and young people up to the age of 18 in the UK suffering from serious or terminal illness and their family and carers. The Commission engaged with the charity’s trustees in August 2016 about a number of regulatory concerns identified from complaints about the charity and from the Commission’s own scrutiny of the charity. An investigation has been opened as the Commission has been unable to adequately address any of its concerns with the trustees and because there are indications of misconduct or mismanagement. The inquiry will consider whether the charity is operating in furtherance of its charitable objects and for the public benefit, examine the administration, governance and management of the charity by the trustees and examine the trustees’ non-compliance with their reporting duties.
  • Child Survival Fund (1116070). The charity’s objects include to relieve poverty, distress and suffering amongst children and young persons throughout the world. The Commission has a history of regulatory engagement with the charity regarding concerns over high fundraising costs and a significant debt owed to a direct mailing agency. The Commission undertook proactive monitoring of the charity amid further concerns about the charity’s fragile financial position and the trustees’ apparent failure and inability to address ongoing issues within the charity. The trustees have failed to provide reassurance to the Commission with respect to an action plan issued to the charity in January 2016, which was designed to address these concerns.
  • Kids ‘N’ Cancer UK (1138701). The charity has objects to provide assistance and financial support to children seeking cancer treatment, and to assist with the overseas costs of Proton Beam Therapy which is not yet available in the UK. The Commission has established that there are on-going regulatory issues relating to the administration and financial controls of the charity following the arrests of a trustee and an employee of the charity.
  • The Alternative Animal Sanctuary (1111406). The Commission initially engaged with the charity in November 2016 as part of a proactive project focusing on a sample of charities contracting with third-party fundraising agencies. This led to concerns about the charity’s apparent overreliance on a fundraising agency and the rate of return to the charity. Further regulatory concerns have been established regarding the significantly high costs and fees of the agreement, the trustees’ original decision to enter into the agreement, the ongoing management of the arrangements by the trustees and the transparency of the mailing material. The Commission is concerned that the public is unaware of the proportion of donations that is consumed by the costs and fees associated with the fundraising agreement as compared to what is spent on caring for abandoned and neglected animals.

Operational and Inquiry case statistics

The Commission has published its inquiry case statistics and operational case statistics for each of the periods 1 April 2016 to 30 September 2016 and 1 April 2016 to 31 December 2016, see the below links for more information:

Also see below under Accounting, Fundraising and New Regulatory duty.

Charity law cases

The Upper Tribunal has dismissed the appeal by Manchester New Moston Congregation of Jehovah’s Witnesses against the Commission’s decision to open an inquiry into the charity, upholding the decision of the First-tier Tribunal. The Commission has published a statement in response to the decision. This was a separate action to the litigation involving the main Jehovah’s Witnesses charity Watch Tower Bible & Tract Society of GB.

New ‘Economic growth duty’ for certain regulators

Last month an order was made commencing provisions under the Deregulation Act 2015 that:

  • Place a new “economic growth duty” on regulators exercising certain regulatory functions, to have regard to the desirability of promoting economic growth. In particular, regulators must consider the importance of ensuring that any regulatory action that they take is necessary and proportionate.

The Economic Growth (Regulatory Functions) Order 2017 (SI 2017/267) lists the regulators that are subject to the economic growth duty. They include:

  • The Charity Commission for England and Wales
  • Information Commissioner (except for FOI powers)
  • Registrar of Companies
  • Regulator of Community Interest Companies
  • The Care Quality Commission


NCVO has published a summary of responses to the consultation on the revised Charity Governance Code.  The final version of the Code is expected to be published in the summer.  This Civil Society Media article highlights some key points made in the responses. 

Also see under Corporate Governance below.

Independence of the voluntary sector

Civil Exchange has published ‘A Shared Society? The independence of the voluntary sector in 2017‘.  This report is the sixth in a series of annual health checks of the relationship of the state and the voluntary sector.  Among other things, the report explores the potential of the new context created by Brexit.  See here for a summary.


The Charity Commission has launched new templates to help directors of charitable companies with income below £500,000 to prepare their accounts.  The templates have been produced in partnership with Companies House and are relevant for reporting periods beginning on or after 1 January 2015. 

ICSA has published a revised guidance note on the terms of reference for audit committees.

Transparency and money laundering

The government has published a call for evidence seeking views on proposals to establish a register of the beneficial owners of overseas entities that either own UK property, or that engage in UK government procurement.

Tax and VAT

HMRC has updated its guidance to reflect the rule changes for the Gift Aid Small Donations Scheme from 6 April 2017.

You have probably seen coverage of HMRC proposals to introduce three additional gift aid checks.  Civil Society Media has reported that, after concern in the sector over implementation of this, HM Revenue and Customs has said the three-stage Gift Aid checks will not be mandatory and that it will “continue to develop” its position.

Also see under Philanthropy and Scotland below.


The UK’s post-Brexit deal with the EU

The Council of the EU has set out its draft negotiating guidelines for Brexit, with Donald Tusk making remarks on these next steps following the UK notification of withdrawal, including that a deal on the future relationship can only be concluded once Britain is a “third party”.

Sector implications

A4ID has published a briefing on the impact of Brexit on financing arrangements in the sector.

Charity Finance Group has published a blog considering what the EU’s Brexit Strategy means for charities.


ICO penalty notices

As you have probably seen, last week the Information Commissioner’s Office (ICO) issued eleven charities with a monetary penalty under section 55A of the Data Protection Act 1998 for misusing donors’ personal data.

The Charity Commission has also announced it has opened compliance cases to assess whether the trustees of the charities acted in accordance with their duties under charity law.  All the charities are co-operating with the Commission.

And Civil Society Media reports that Lord Grade, chair of the Fundraising Regulator board, would be writing to each of the 11 charities to request “they provide an account for the Fundraising Regulator of the remedial steps they have taken” to prevent future data protection breaches.

ICO consent guidance

The ICO’s consultation on its new GDPR consent guidance closed on 31st March. See below for responses to the consultation from:

BWB also submitted a response.  Please contact Mairead O’Reilly if you would like a copy.

Donor profiling

The Information Commissioner’s Office (ICO) has published a discussion paper about profiling generally under the General Data Protection Regulation, “Feedback request – profiling and automated decision-making”.  There is also an accompanying blog. The ICO is asking for the views of stakeholders and examples of best practice before 28 April 2017. 

News from the Fundraising Regulator

The Fundraising Regulator’s latest newsletter includes:

  • reminder to charities that have not yet paid the levy
  • A reminder that the Code consultation closes on 28 April
  • Confirmation the Fundraising Preference Service will be launched this summer

Payroll giving

The government has issued this press release marking the 30th anniversary of the introduction of payroll giving.  CAF has published this summary of its Give as you Earn payroll giving scheme. 

Prize draws and competitions

The Advertising Standards Authority (ASA) has issued guidance on the use of terms and conditions in promotional marketing, such as “two for the price of one” offers, money-off offers, text-to-wins, instant-wins, competitions and prize draws. The guidance reiterates and interprets the rules in section 8 of the CAP Code on Promotional Marketing, illustrating the ASA’s approach by reference to specific rulings.

Legacy fundraising

Although the latest from the Government is that it plans to press ahead with its proposals to drastically increase probate fees, Charity Tax Forum is reporting that the Joint Committee on Statutory Instruments has drawn the special attention of both Houses to the draft Non-Contentious Probate Fees Order 2017 on the grounds that, if it is approved and made, there will be a doubt whether it is intra vires, and that it would in any event make an unexpected use of the power conferred by the enabling Act.   

Fundraising training

The Foundation for Social Improvement has been awarded a grant worth £199,580 to run a two year training programme, helping small, local charities and community groups develop their fundraising skills.

Also see under Scotland below.

Philanthropy and funders

Philanthropy Impact and STEP are running an event on 3rd May “Tax Update in the Context of Philanthropic Giving”, details here.

New Philanthropy Capital has published this blog “Foundation boards must ask: Are we being ambitious enough?”

Social finance

Fair for You has launched its third social impact report showing how it is providing alternatives to high cost credit. The report published by the Centre for Responsible Credit (‘CfRC’) illustrates the huge social benefits which could be achieved if Government were to widen the availability of affordable, not for profit, alternatives to high cost credit.

Pioneer’s Post has published an interview with June O’Sullivan (CEO of London Early Years Foundation) and Servane Mouazan (founder of Ogunte CIC) exploring some of the key issues around gender parity on social investment boards.

In this Civil Society Media article, Jeremy Wells of Newton Investment Management reports that charities have lower expectations of future returns than previously, while environmental, social and governance (ESG) factors and alternative investments represent growing areas of interest.

David Floyd of Social Spider CIC explores the key developments in the UK social investment market in the last 10 years, and wonders how it may evolve going forwards, in this article published by Pioneer’s Post.

The House of Lords Select Committee on Financial Exclusion has published a report on how to promote greater inclusion for those typically not served by – or with limited access to – financial services. It contains a number of recommendations, including the appointment of a dedicated Minister for Financial Inclusion, the addition of financial inclusion to the Financial Conduct Authority’s core list of objectives, and lowering barriers for those with disabilities. The report can be accessed here.

The Economic and Monetary Affairs Committee of the European Parliament has adopted a draft report on the European Commission’s proposed regulation to amend the European Social Entrepreneurship Funds Regulation (EuSEF) and the European Venture Capital Funds Regulation. The report suggests widening the types of fund managers that can establish and manage EuSEFs, widening the definition of “positive social impact”, and lowering the minimum investment in EuSEFs to EUR 50,000. The press release announcing the adoption can be found here.

The European Commission has published a consultation paper that seeks views on making FinTech more competitive and innovative. FinTech, short for financial technology, includes forms of finance such as crowdfunding. The consultation covers a broad range of issues including regulatory efficiency, operational costs and the competitiveness of the Single Market. Section one asks questions about how FinTech can be used to promote financial inclusion – i.e. wider access to financial services for those who are typically excluded. Responses are invited by 15 June, and the paper is available here.

Social enterprise

See under New “Economic growth duty” above.

Responsible business

The House of Commons and House of Lords’ Joint Committee on Human Rights has published a report on human rights and business.  Specifically in respect of the requirement in section 54 of the Modern Slavery Act 2015 (MSA 2015) for relevant commercial organisations to prepare a slavery and human trafficking statement, the report identifies a number of shortcomings in the Act. In particular there is no central list of those companies that are required to comply, which is proving an obstacle to those who would monitor compliance.  The Joint Committee urges the government to facilitate the passage of the Modern Slavery (Transparency in Supply Chains) Bill, a private members bill that has been passed by the House of Lords but has not yet received a second reading in the House of Commons. The Bill seeks to amend the MSA 2015 not only so as to require the Secretary of State to compile a list of companies that should be in compliance but also so as to:

  • Extend the transparency in supply chains requirements to public bodies.
  • Prevent public bodies from procuring services from companies that have not conducted the required due diligence.


See above under New Economic growth duty and under Equality below.

The Education Funding Agency and Skills Funding Agency are to merge into a single funding agency – to be called the Education and Skills Funding Agency – which will sit within the Department for Education and begin to operate from April 2017.

Early years

The Department for Education has published a short guide, setting out the criteria that parents of three and four year olds will be required to meet, in order to be eligible for 30 hours free childcare.


Education Secretary Justine Greening has announced a £2.4 billion cash injection for schools. 

The government has launched LocatEd, a new government owned property company set up to purchase and develop sites to help create 500 new free schools. LocatED will operate with a £2 billion budget and will work directly with landowners, agents and developers to secure sites and land for new free schools.

Communities and families

Communities Minister Andrew Percy has announced more than 54 projects will receive a share of over £3 million communities funding to help deliver additional services.  A third of the projects receiving funding will focus on offering personalised schemes to improve people’s health and general wellbeing. Other schemes will tackle social isolation, help people find a job, and support those facing homelessness.

The government has published Supporting disadvantaged families, Troubled Families Programme 2015 to 2020: progress so far, the first annual report of the Troubled Families Programme.  See here for a summary press release. 


See under Communities and families above.

The Information Commissioner’s Office has launched a new set of resources aimed at improving records management in the health sector.

The Care Quality Commission has set new equality objectives for 2017 – 19. Through its inspections, the CQC will check that providers make person-centred care work for everyone, from all equality groups – for example for lesbian, gay, bisexual and transgender people using adult social care or mental health inpatient services. It will also look at how providers are meeting the new Accessible Information Standard, which applies to disabled people who have information and communication needs, for example, deaf people or people with a learning disability. The CQC has also set an objective to look at reducing barriers and improving access to primary care for migrants, asylum seekers, Gypsies and Travellers, to help address their poor health outcomes.

New Philanthropy Capital has published this blog “Health: Out of the headlines but still on our minds”.


See under Charity Commission above.

International development

The Prime Minister has set out the details of a £1 billion jobs and education package to support the most vulnerable victims of the Syrian conflict.  The funding combines an allocation of £840 million pledges made last year at the London Syria Conference along with £160 million of new money.

The Parliamentary International Development Committee has released its latest report about DFID’s use of private sector contractors.  The report urges DFID to take a “more robust approach to the procurement, oversight and evaluation of the delivery of aid programmes by contractors.”  Bond reports it submitted evidence to the IDC highlighting the importance of multi-actor bids due to the differing types of expertise, skills and knowledge different sectors bring to the table, including the private sector. However, Bond also flagged the importance of having a level playing field to ensure NGOs are not used as “bid candy” by private contractors to attract a bid, only to be dropped at a later stage.

Rehabilitation of offenders

The Ministry of Justice has announced new funding to help vulnerable women “turn their backs on crime”.

New Philanthropy Capital has published “Beyond bars”, an outline of its findings from research into the role of charities in the criminal justice sector.

Data protection

See above under New “Economic growth duty”, Fundraising and Health.

The Information Commissioner’s Office (ICO) has taken action against two nuisance marketing firms, resulting in PRS Media, trading as Purus Digital, being fined £140,000 for sending around 4.4 million spam texts and Xternal Property Renovations being fined £80,000 for making nuisance phone calls.

The ICO has published a blog about EU proposals to reform the European directive that forms the basis of the Privacy and Electronic Communications Regulations (PECR).   These changes are due to come into effect in May 2018 alongside the GDPR and, as with GDPR, the UK government has confirmed these changes would be implemented in the UK before we leave the EU.

The ASA has found that Lands’ End Europe Ltd (Lands’ End) breached the Committee of Advertising Practice Code (the CAP Code) as it emailed marketing material to a complainant who had not explicitly consented to receive marketing communications from them. The complainant submitted his personal information to the partner website of a company which then supplied the data to an email re-targeting agency. This agency sent the email to the complainant on Lands’ End’s behalf. The complainant had opted in to third party marketing communications from “affiliate partners” but this did not make the nature of the third parties or the types of communications which might be received clear. The complainant would not have anticipated receiving marketing communications from Lands’ End as a result of submitting details to the partner website. Lands’ End had primary responsibility for ensuring their marketing communications complied with the CAP Code and should be able to demonstrate that consumers had provided explicit consent to receive marketing communications from them. The advertisement breached rules 10.13 and 10.13.3 of the CAP Code (Database practice). Lands’ End must ensure that future marketing emails are only sent to those for whom they hold evidence of appropriate consent. See here for the full ruling. 

Nuisance calls – Prime Minister Theresa May, has announced the launch of a half-a-million-pound project which will see hi-tech call blocking devices installed in the homes of some of the most vulnerable people across the UK who have been identified by doctors, Trading Standards officials and local councils as being at risk from nuisance callers. The trueCall devices will completely block all recorded messages, silent calls and calls from numbers not already pre-identified by the home owner.


The Equality and Human Rights Commission has published ‘Being disabled in Britain: A journey less equal‘, the “most comprehensive analysis ever on how the rights of disabled people are protected in Great Britain”.

The Government Equalities Office has published a consultation paper on how best to address caste discrimination in Britain. The consultation, which ends on 18 July 2017, explores two options: making an order under section 9(5) of the Equality Act 2010 to cover caste as an aspect of race discrimination; and a laissez-faire option of allowing case-law to develop naturally following the Employment Appeal Tribunal’s judgement in Tirkey v Chandok. This option would involve repealing or amending section 9(5) to remove the obligation on the government to legislate in this field.   The consultation has relevance to all fields of activity covered by discrimination law including employment, goods and services, education and public functions.


The Disclosure and Barring Service has issued its March newsletter.


See under Responsible Business above.

Corporate governance

The Parliamentary Business, Energy and Industrial Strategy Committee has published a report on its inquiry on corporate governance.  Broadly the report recognises the strength of corporate governance in the UK but does make a number of recommendations. 

On 28 March 2017, the McGregor-Smith Review on race in the workplace and the government’s response to the Review were published. The Review makes a number of recommendations to improve diversity within organisations. These include that businesses with more than 50 employees should publish a breakdown of employees by race, ideally by pay band, on their website and in the annual report, and should identify a board-level sponsor for all diversity issues, including race, who should be held to account for the overall delivery of aspirational targets. To ensure this happens, Chairs, CEOs and CFOs should reference what steps they are taking to improve diversity in their statements in the annual report.


OSCR has published on its website:

  • video of FAQs about SCIOs, the Scottish Charitable Incorporated Organisation. 
  • recent interview with Alison Elliot, Chair of the Independent Fundraising Standards and Adjudication Panel for Scotland.

Northern Ireland

CCNI has published a report explaining how the law is applied during the charity registration process and why some applications fail. CCNI has received more than 6,000 registration applications since it was established; the report states that only 39 have been refused charitable status.

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This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of April 12, 2017.